Correlation Between Tezos and Stellar

Can any of the company-specific risk be diversified away by investing in both Tezos and Stellar at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tezos and Stellar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tezos and Stellar, you can compare the effects of market volatilities on Tezos and Stellar and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tezos with a short position of Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tezos and Stellar.

Diversification Opportunities for Tezos and Stellar

0.91

Correlation Coefficient

Tezos  Stellar

Almost no diversification

The 3 months correlation between Tezos and Stellar is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tezos and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and Tezos is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tezos are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of Tezos i.e., Tezos and Stellar go up and down completely randomly.

Pair Corralation between Tezos and Stellar

Assuming the 90 days trading horizon Tezos is expected to under-perform the Stellar. But the crypto coin apears to be less risky and, when comparing its historical volatility, Tezos is 1.43 times less risky than Stellar. The crypto coin trades about -0.22 of its potential returns per unit of risk. The Stellar is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Stellar on December 30, 2024 and sell it today you would lose (6.00) from holding Stellar or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tezos  vs.  Stellar

Tezos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tezos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Tezos shareholders.

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Stellar shareholders.

Pair Trading with Tezos and Stellar

The main advantage of trading using opposite Tezos and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tezos position performs unexpectedly, Stellar can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stellar will offset losses from the drop in Stellar's long position.

The idea behind Tezos and Stellar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.